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Overview: Everyone agrees
that businesses require effective leaders, but identifying the necessary traits
and skills of effective leaders may not be simple. This article seeks to identify
the proven qualities of effective leaders, probe the impact of effective leadership
on bottom line performance, and discuss strategies to identify who your future
leadership 'stars' may be.
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Takeouts:
- High performing organisations
recognise leadership as a key component of jobs at all levels, and are committed
to developing the leadership potential of individuals to ensure long term business
profitability.
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Tomorrow's
leaders will face even greater challenges in steering their organisations toward
enduring profitability due to increasing global competition, rapid advancements
in information technology and public scrutiny of their personal character and
integrity. They will need to master new competencies in strategic direction, change
management, relationship building and talent development. -
When assessing leadership potential in current
or potential staff, be clear about what competencies are required for specific
roles, and ensure your leadership development initiatives are demonstrably linked
to organisational outcomes. | |
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According
to Nietzsche, "To do great things is difficult; but to command great things
is more difficult". Although never easy, effective leadership is crucial
for organisational success. The importance of leadership is evidenced by the sheer
volume that is discussed, debated and documented about the subject. A Google search
reveals over 167 million references to leadership and Amazon.com lists over 16,000
titles on the subject.
As the demand
for strong leadership at all organisational levels intensifies, so too will the
demand for more financial accountability for leaders, and greater emphasis on
identifying and developing leadership potential. So before you sign everyone up
to the next "mastering leadership in 30 days" workshop brochure that
floats across your desk, it's important that your organisation develops a common
understanding of: a) exactly
what leadership is;
b) how effective leadership makes a difference within
your organisation; and
c) how to continually develop the leadership capability
within your organisation. Leadership
Defined The core of leadership
boils down to having influence. One commentator defines leadership as "the
ability to influence, cast vision, motivate and direct individuals, teams and
organisations to harmoniously accomplish their goals."
Today the concept of leadership
is being redefined to mean not only a set of behaviours but also a process that
produces and results from relationships - relationships that focus on the interactions
of both leaders and collaborators instead of focusing only on the competencies
of leaders. Qualities
of Effective Leadership Many studies
have been conducted over the years to ascertain what makes some leaders more effective
than others. Is it a combination of certain personality traits, or particular
situations which determine leadership capabilities? Or a mix of both? Historical
attempts to isolate individual leadership traits have been largely unsuccessful,
and situational leadership theories proved insufficient because the theories could
not predict which leadership skills would be more effective in certain situations Recent
research has identified two categories of behaviours which are exhibited by effective
leaders. These behaviours have been categorised along
two common dimensions: initiating structures (i.e. concern for organisational
tasks), and consideration (i.e. concern for individuals and interpersonal relations).
Effective leaders have been found to perform well in both dimensions. Most
experts would agree that truly effective leadership is essentially rooted in trust,
integrity and informal authority, and possesses wisdom and courage. Such leaders
are accomplished communicators who aim to empower followers, and have been able
to win respect through their depth of character as well as their skills, experience
and ability. This kind of leadership motivates people to perform at their highest
level. A leader's credibility and trustworthiness are paramount; increasingly,
character represents the most critical quality in leadership. According
to one recent Canadian study , effective leaders
of the future will need to perform four essential functions, and avoid four potential
pitfalls. To be an effective leader in the future, an individual must become a:
- master strategist,
- change
manager,
- relationship/network
builder, and
- talent developer.
The most important factors which
could derail a future leader are: - hesitancy
in taking necessary business risks,
- personal
arrogance and insensitivity;
- controlling
leadership style; and
- reluctance
to tackle difficult people issues.
While
common leadership qualities or competencies have been identified in effective
leaders, developing such core leader qualities may no longer be sufficient. Context
is critical. Not only will leadership competencies need to correspond to the organisation's
particular strategy and business model but some
would argue that not all leaders within an organisation need to posses the same
attributes to be effective. Financial
Impact of Effective Leadership Ultimately,
businesses are looking for leadership that links the rhetoric of the management
gurus to bottom-line financial results. Despite the significant investment leading-edge
companies are making in leadership development programs, efforts to quantify their
benefits precisely are difficult at best. Organisations must create a "chain
of impact" that connects leadership development to relevant organisational
outcomes. One
such program, developed by E. Ted Prince, CEO and founder of the Perth Leadership
Institute, measures a leader's financial impact on their organisation.
The personal financial traits of leaders constitute their "financial signature",
and this "signature" can link leadership competency to company outcomes
and company valuation. This assessment can provide a useful tool in predicting
the valuation consequences for a company of their particular leader. More
recent research also suggests that nurturing tomorrow's leaders internally is
a key aspect of an organisation's future financial success. In a groundbreaking
US study into the habits of highly successful companies documented in the best
selling book 'Built to Last', Collins and Porras found that across seventeen hundred
years of combined history within the World's most dominant and financially successful
companies, there were only four individual cases of an outsider coming directly
into the role of chief executive.
Renowned
management consultants, McKinsey, also concluded in 2001
that:
" … companies doing the best job of managing their
talent deliver far better results for shareholders. Companies scoring in the top
quintile of talent-management practices outperform their industry's mean return
to shareholders by a remarkable 22 percentage points."
So,
research seems to confirm what common sense would have us believe - effective
leadership and talent management practices does have a significant impact on a
company's financial performance.
Identifying Future Leaders - Testing & Measuring
High
performing organisations recognise leadership as a key component of jobs at all
levels and are committed to creating leaders throughout their organisation. A
variety of approaches can be used to assess the leadership potential of individuals,
however great care should be taken with any approach, as a poor choice can have
significant economic and organisational consequences for the business.
Regardless of what 'testing' format is chosen and tools are used, their limitations
must be acknowledged. 1.
Written Assessments: these have the advantage of objectivity, systematically
exploring leadership qualities and measuring them against a much larger pool -
but there are no guarantees of success. We all know people who test well, but
fail in life. These types of tests give indicators, but not examples of practical
leadership capability. 2.
Assessment Centres: these take matters one step further with role-plays and
skills exercises designed to rate performance on a variety of issues, including
leadership, judgement, decisiveness and stress tolerance. Skills insights may
be gained, but they cannot completely replicate a real-world work context. 3.
Predictability: There is no firm evidence that performing well on a test today
will predict successful leadership over a period of time.
Past performance is absolutely no indication of future performance. To
maximise the benefits of any testing process, ensure that any assessment task
closely matches the demands of the position, satisfies validity and reliability
statistical criteria, and be careful how results are interpreted. Resist the temptation
for a simple numerical comparison, and look for consistency between test results
and interviews. Well designed tests should add greater insight, but will never
eliminate the need for wisdom and common sense. When
the person is already an employee, some form of 360o feedback that involves subordinates
rating their superiors can be a very useful predictor of good performance as self
perceptions are subjective. And finally always remember
that there is no substitute for practical hands on experience over an extended
period. Being appointed responsibility to manage a pet project or key business
unit can, over time, give the incumbent CEO an excellent insight into an individual's
ability to manage, inspire and deliver successful results.
Conclusion
The demands on today's
leaders and those of the next generation will continue to grow. Companies will
need to invest in developing leadership strength now to ensure continued financial
success in coming years. To be effective in the future, leaders will need to master
a new range of competencies such as change management and talent management, and
will continue to be under increasing public and shareholder pressure to demonstrate
integrity and credibility in both their relationships and everyday actions.
References:
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About Regent Recruitment
Regent Recruitment is a recruitment consultancy that assists leading Australian
employers to attract and retain talented staff on a contract, temporary or permanent
basis. Whether we are filling one permanent role or recruiting contract staff
for a 400-seat call centre, we deliver an exceptional recruitment service.
Unlike other recruitment consultancies, Regent
Recruitment is unique in that it combines the capabilities of a large-scale multinational
recruitment operation with exceptional service levels typically only associated
with small boutique agencies.
How
can we assist you?
We would welcome the opportunity to have a confidential
meeting to discuss your staffing needs in more detail. If
you are interested, in the first instance please call Howard Mereine, General
Manager, on (03) 9909 7150 or e-mail Howard at hmereine@regentrecruitment.com.au. We
look forward to speaking with you.
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This article was licenced by Regent Recruitment for the Regent
Recruitment client newsletter.
Written by Victoria Small, and edited by Paul Quinn, Quinntessential Marketing
Consulting Pty Ltd.
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The
views and opinions expressed in this document are those of the authors and do
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